The shadow treasurer Chris Bowen has given a whack to housing affordability for young people in Australia.
In a speech to the McKell Institute today, Mr Bowen said high property prices was denying young Australians a source a wealth and it could have a direct impact on reducing start-up investment in innovation.
In the 25-34 age group, the numbers aren’t flattering, with the number of people in that age bracket owning their home dropping from 62 to 42 per cent since 1982.
“This is not surprising given that over the last 25 years young people have gone from having to pay just five times, to now having to pay up to 15 times their annual income to purchase a new home,” Mr Bowen said.
“The fact that young people are unable to crack into the housing market strips them of one of the most fundamental wealth drivers through their lifetime.”
“No wonder the Grattan Institute has shown that falling home ownership rates for young people mean they now have less wealth than people of the same age eight years before.”
Mr Bowen said first-time and early entrepreneurs often borrowed against their home to get started and property affordability could put the Turnbull Government’s focus on innovation and entrepreneurism in jeopardy if start-ups couldn’t get access to capital.
“If young people can’t afford a home, then that opportunity for wealth creation in the future will be cut off as well.”
Mr Bowen didn’t stop there in his McKell Institute speech.
“We are a nation that can no longer house its own children,” he said.
“It’s not good enough for governments to shrug their shoulders and say, “Well, that’s the market in operation’. There are few areas of our economy more a feature of government policy settings than housing.”
Mr Bowen said negative gearing gave too generous a tax concession to investors and not enough assistance to first-home buyers.
Labor want to limit negative gearing to new properties in an attempt to put first-home buyers on more of an equal footing to property investors and to stimulate new construction.